best-performing cities 2010 - where jobs are created and sustained

8/8/2019 Best-Performing Cities 2010 - Where Jobs Are Created and Sustained

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Best-Performing Cities 2010Where Americas Jobs Are Created and Sustained

Ross C. DeVol,Armen Bedroussian,

Kevin Klowden, and

Candice Flor Hynek

October 2010

Five of Top 10

Metro Areas Lie Deep

in the Heart of Texas


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Best-Performing Cities 2010Where Americas Jobs Are Created and Sustained

Ross C. DeVol,Armen Bedroussian,

Kevin Klowden, and

Candice Flor Hynek

October 2010


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About the Milken Institute

The Milken Institute is an independent economic think tank whose mission is to improve the lives and economic conditions

of diverse populations in the United States and around the world by helping business and public policy leaders identify

and implement innovative ideas for creating broad-based prosperity. We put research to work with the goal of revitalizing

regions and nding new ways to generate capital for people with original ideas.

We focus on:

human capital: the talent, knowledge, and experience of people, and their value to organizations, economies, and

society; fnancial capital: innovations that allocate nancial resources eciently, especially to those who ordinarily

would not have access to them, but who can best use them to build companies, create jobs, accelerate life-saving

medical research, and solve long-standing social and economic problems; and

social capital: the bonds of society that underlie economic advancement, including schools, health care, cultural

institutions, and government services.

By creating ways to spread the benets of human, nancial, and social capital to as many people as possibleby

democratizing capitalwe hope to contribute to prosperity and freedom in all corners of the globe.

We are nonprot, nonpartisan, and publicly supported.

2010 Milken Institute


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Executive Summary ................................................................................... 1

Introduction ............................................................................................... 5

The Biggest Gainers .................................................................................. 9

The Biggest Decliners .............................................................................. 11

The Best-Performing Large Cities ..........................................................13

Americas 10 Largest Cities: Performance.............................................. 29

The Best-Performing Small Cities ...........................................................37

Complete Results: 2010 Best-Performing Large Cities ........................ 45

Complete Results: 2010 Best-Performing Small Cities ........................ 47

Appendix ................................................................................................. 49

Endnotes .................................................................................................. 55

About the Authors .................................................................................. 60

Table of Contents


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Executive Summary

Executive Summary

Our Best-Performing Cities index is updated on an annual basis to provide an objective,

comprehensive measure of economic performance across metropolitan areas of the country.In most years, it gives a good indication of the underlying structural performance of regionaleconomies.

While the 2010 edition still sheds light on structural factors underpinning the economic growth

process, the severity of the recent recession brings more cyclical factors to bear. For example,several of this years best-performing cities had military bases that beneted from Defense Base

Realignment and Consolidation (BRAC) actions. A best-performing city in this context should beviewed as one that was able to minimize the job losses and economic dislocations in the midst of a

severe national recession. We include measures of job, wage, and technology performance over ave-year period to capture the structural elements.

Among this years key ndings:

Texas metros dominated the rankings even more impressively than last year. The state claimed

three of the top 5 positions; ve of the top 10 positions and 11 of the top 25 among thenations 200 largest metros.

KilleenTempleFort Hood, Texas, moved past AustinRound Rock, Texas, to secure rstamong the 200 largest metros in the country.

WashingtonArlingtonAlexandria, DCVAMDWV, was the top performer among the 10largest metros and an impressive sixth in the overall rankings.

Fargo, North DakotaMinnesota, was rst on the small cities list, and Bismarck, NorthDakota, was second.

Clarksville, TennesseeKentucky, moved up 97 spots from last year to 39th, recording the

biggest gain among metros.

Only a handful of cities eked out job gains in 2009. Through April 2010, just a few more citiesmanaged increases in employment. The 2007-2009 recession came to an end in June 2009, but its

eects continue to sting. Real GDP declined 4.1 percent from peak to trough, the most severe in thepost-war period, eclipsing the previous record of 3.7 percent in the 1957-1958 recession.

While virtually no sector of the economy went unscathed, the magnitude of the contraction in

business investment and manufacturing explains much of the severity in the recent period relativeto other recessions. The bursting of the housing bubble, retrenching consumers, a severe drop inexports, and a slashing of business inventories cut across a wide swath of industries.

The ultimate measure of the severity of the recession is its impact on labor markets, and here the

toll of the Great Recession was devastating and continues to this day. Based on the Bureau of LaborStatistics establishment survey, a total of 8.4 million jobs were lost during the recent recession, and

the unemployment rate hit 10.1 percent.


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Best-Performing Cities 2010

Some economists are predicting that the economy is in store for a so-called double-dip recession,but they remain in the minority. The U.S. economy faces many headwinds, but it seems most likely

that moderate, but disappointing, growth is the most likely outcome. It will be disappointing in the

sense that job growth will not be sucient to bring down the unemployment rate to where it wasbefore the recent crisis.

The top performers shared many of the same characteristics as last year. None experienced a largecorrection in housing markets. In many cases, the excesses of the housing bubble years were

largely avoided and overall economic performance was more stable than in other metros. Onefactor that was more vital than last year was a low dependence on durable goods manufacturing.As the production of capital equipment and consumer durable goods plummeted, metros without

much of this activity were largely shielded. Another characteristic of top performers was a relativelysmall presence of nancial services, an industry that experienced large job losses due to bank

consolidation and losses on their loan portfolios.

Several metros with diversied technology basesincluding high-tech manufacturing as well ashigh-tech serviceswere among the best performers. Most of the top-ranking metros have an

employment mix that relies heavily on services, which experienced a smaller decline than mostother sectors. Several metros had a large military presence and beneted from BRAC actions. A few

of the best-performing metros had a dependence on energy exploration, services, and alternativeenergy investments. With just a few exceptions, the top-ranked metros had low business costs and

favorable business climates.

The Top 25 Best-Performing Cities

Texas metros dominated the 2010 rankings, eclipsing even last years stellar performance. LoneStar State metros occupied 11 of the top 25 positions among the 200 largest metros in the country

and ve of the top 10. For the second year running, the same two Texas cities claimed the top twospots, except KilleenTempleFort Hood edged past AustinRound Rock to take rst among the 200

largest metros. Another way to highlight Texas dominance is that just two of the states 13 metrosdidnt make the top 25, with the lowest-ranking metro coming in at 57th overall.

As highlighted throughout this report, Texas metros have beneted from a low reliance on durable

goods manufacturing, a low cost of doing business, a favorable business climate, the benets ofBRAC activities, greater reliance on trade with Mexico and South America (which declined less than

trade with other parts of the world), and ongoing energy exploration activities and alternative fuelsresearch. Throw in their aggressive recruitment of businesses from out of state, and you have the

ingredients for a very successful recipe.

North Carolina had three metros in the top 25; RaleighCary at seventh, Durham at 15th andFayetteville at 18th. These metros shared many of the same attributes as the Texas metros. No other

states had more than one metro in the top 25.

Led by Texas, the South held 21 of the top 25 positions. The Northeast and West each had two

metros in the top 25.


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Executive Summary

Metropolitan statistical area (MSA)2010rank

2009rank

Killeen-Temple-Fort Hood, TX 1 2

Austin-Round Rock, TX 2 1

Huntsville, AL 3 8

McAllen-Edinburg-Mission, TX 4 4

Kennewick-Richland-Pasco, WA 5 6

Washington-Arlington-Alexandria, DC-VA-MD-WV* 6 25

Raleigh-Cary, NC 7 10

Anchorage, AK 8 40

El Paso, TX 9 14

Houston-Sugar Land-Baytown, TX 10 5

Lafayette, LA 11 9

Trenton-Ewing, NJ 12 46

Brownsville-Harlingen, TX 13 70

San Antonio, TX 14 11

Durham, NC 15 6

Amarillo, TX 16 35

Dallas-Plano-Irving, TX* 17 13

Fayetteville, NC 18 31

Charleston-North Charleston, SC 19 30

Bethesda-Gaithersburg-Frederick, MD* 20 51

Oklahoma City, OK 21 26

Cambridge-Newton-Framingham, MA* 22 45

Fort Worth-Arlington, TX* 23 12

Lubbock, TX 24 29Provo-Orem, UT 25 28

*Indicates metropolitan division

Source: Milken Institute.

Kennewick-Richland-Pasco, WA MSA moved to the large cities list. It ranked sixth in the best-performing small cities in 2009.

Rank according to 2010 index

Table 1. Best-performing cities: Top 25 large metros

This Years Best-Performing City

KilleenTempleFort Hood, Texas, claimed the top spot in our 2010 Best-Performing Cities index,

edging up from second last year. The area, which experienced a devastating tragedy at Fort Hoodin 2009, should be heralded for its economic performance amid a severe national recession. The

metro areas job growth ranked in the top 10 last year and over the ve years from 2004-2009, butits overall performance was fueled by its rst-place position in wage and salary growth over the

ve-year (2003-2008) and one-year (2007-2008) periods examined. Additionally, it ranked third inyear-over-year job growth in the 12 months ending April 2010. Expansion at Fort Hood, with the

associated economic ripple eects, is the primary catalyst for this stellar performance.


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The Ten Largest Cities

Americas largest metropolitan areas face unique challenges to growth, including high density

and minimal space for expansion. For this reason, it is appropriate to break out their performancesseparately. It isnt reasonable to expect cities like Los Angeles, New York, or Chicago to grow at thesame rate as Austin, Raleigh, or Huntsville. However, the big metro areas could take new cues from

the favorable business climates promoted by these fast-growing areas.

WashingtonArlingtonAlexandria, DCVAMDWVMD, was the top-performing metroamong the 10 largest metros based on population and ranked sixthoverall on this years list. Thefederal government was by far the primary driver of the regions job growth from 2008 to 2009,

adding nearly 11,000 positions. Last years stimulus package, known as The American Recoveryand Reinvestment Act of 2009, provided a signicant boost to the metros economy. Of the awards

distributed, D.C. received nearly 10 times as much stimulus per capita as the national average.1

The Biggest Gainers

There are several commonalities among the biggest gainers on the 2010 Best-Performing Citiesindex. The most signicant theme was a heavily service-based economy with little durable

goods production. This is because the service sector tends to be less sensitive to business cycles.Conversely, metros with a heavier reliance on durable goods manufacturing, which took a dramatic

hit during the recession, witnessed the largest declines in output and employment. Among thebiggest gainers, a majority also didnt experience an extreme housing bubble earlier in the decade,

allowing them to avoid a severe correction.

Gains were recorded across the country. Tennessee, West Virginia, Kentucky, California, and Floridaeach landed two metros on the list. Columbus, GAAL, made its second consecutive appearance on

the list, leaping 67 spots to claim 45th. The metro experiencing the largest gain was Clarksville, TNKY, which moved up 97 spots to 39th place. BRAC shifts to Fort Benning (Columbus) and increased

defense spending at Fort Campbell (Clarksville) were key drivers of growth in those regions.

The Best-Performing Small City

Fargo, North Dakota, jumped to rst among the best-performing small metros in 2010, afternishing 10th the previous year. Fargo experienced a very mild recession and quickly recovered. The

unemployment rate was below 4 percent, one of the lowest in the nation. The tight labor marketelsewhere resulted in an increase of new residents. The increased global demand for agricultural

commodities such as wheat, corn, and soybeans, which the state grows in abundance, has benetedthe region in recent years. A growing presence in the technology sector, and biosciences in

particular, has diversied the areas economy.

In this years release, an appendix was added to give further background on the methodologyand weighting scheme we developed. The appendix attempts to validate the methods used fordetermining relative metropolitan growth and its corresponding strength as exemplied by the

existing weights. The regression model developed using the variables included in our rankingexplains 88 percent of the total variation in real GDP growth among 379 metros from 1990 to 2008,

a high degree of explanatory power.


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Introduction

Introduction

The Best-Performing Cities indexwas designed to measure objectively which U.S. metropolitan areas

are most successful in terms of job creation and retention, the quality of jobs being produced,and overall economic performance. Specically, it pinpoints where jobs are being created andmaintained, where wages and salaries are increasing, and where economies and businesses are

growing and thriving.

The index allows businesses, industry associations, economic development agencies, investors,academics, government ocials, and public policy groups to assess, monitor, and gain insight

into each metros relative performance. It also provides benchmarking data that can be used indeveloping strategies to improve and maintain a metros economic performance. Moreover, it

is a tool for understanding consumer markets and business expansion opportunities. In todaysrecessionary climate, it helps determine which regions may present the lowest risk. The 2010 index

applies the methodology used in previous indexes.

In a year when robust growth was in painfully short supply, the top-performing cities posted onlymild increases in employment. Few cities actually experienced meaningful job growth in 2009.

Coming out of the worst recession in the post-war era, the emphasis is not as much on job creationas on job retention. As a result, this years index will hinge on a metros degree of sensitivity to

business cycles, highlighting those that were better able to the weather the storm of the recession.In this kind of environment, it is even more important to evaluate each citys performance in relation

to the nation as a whole and in relation to each other.

We have employed geographic terms and denitions used by the Oce of Management and

Budget (OMB), which in turn uses data from the 2000 census. The OMB denes a metropolitanstatistical area (MSA) as a regiongenerally consisting of a large population nucleus and adjacent

territory with a high degree of economic and social integration, as measured by community ties.2Using these parameters, the agency identies 374 metropolitan statistical areas.3 County population

growth accounts for the creation of new MSAs.

If specic criteria are met, an MSA with a single nucleus and a population of 2.5 million or moreis further divided into geographic areas called metropolitan divisions. There are currently 29

metropolitan divisions. For example, two metropolitan divisions (Los AngelesLong BeachGlendaleand Santa AnaAnaheimIrvine) make up the Los AngelesLong BeachSanta Ana MSA. We include

the smaller metropolitan divisions in the index to reect more accurate geographic growth patterns.

Outcomes-Based, Not Cost-Based

The components shown in the following table are used to calculate our index rankings. The indexmeasures growth in jobs, wages and salaries, and technology output over a ve-year span (2004

2009 for jobs and technology output and 2003-2008 for wages and salaries) to adjust for extremevariations in business cycles. It also incorporates the latest years performance in these areas (2008

2009 for jobs and technology output and 20072008 for wages and salaries). Lastly, it includes12-month job growth performance (April 2009 to April 2010) to capture relative recent momentum

among metropolitan economies.4


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Employment growth is weighted most heavily in the index because of its critical importance in

determining community vitality. Wage and salary growth also measures the quality of the jobs being

created and sustained. Technology output growth is another important element in determining theeconomic vibrancy of cities.

We have incorporated other measures to reect the concentration and diversity of technologyindustries within the MSAs. High-tech location quotients (LQs, which measure the concentration

of the technology industry in a particular metro relative to the national average) are included toindicate a metros participation in the knowledge-based economy.5 We also measure the number ofspecic high-tech industries (out of a possible 25) whose concentrations in an MSA are higher than

the national average.

The Best-Performing Cities indexis solely an outcomes-based measure. It does not incorporate

explicit input measures (business costs; cost-of-living components, such as housing; and otherquality-of-life measures, such as commute times or crime rates). Static input measures, althoughimportant, are subject to large variations and can be highly subjective, making them less

meaningful than more objective indicators of outcome.

Businesses choose to locate in particular areas for various reasons. Some, for instance, opt toremain in high-cost cities despite the availability of lower-cost locations. The output measures used

for this index include the benets of situating in expensive locations. Theoretically, a prosperingregion will raise wages and rents as its businesses tap into more human capital and available space.

Nevertheless, holding all other factors constant (such as the productivity associated with being inone location versus another), a company will generally choose to locate where business costs are

lower and employees enjoy higher living standards.

Component Weight

Job growth (I=2004) 0.143

Job growth (I=2008) 0.143

Wage and salary growth (I=2003) 0.143

Wage and salary growth (I=2007) 0.143

Short-term job growth (Apr09-Apr10) 0.143

Relative high-tech GDP growth (I=2004) 0.071

Relative high-tech GDP growth (I=2008) 0.071High-tech GDP location quotient 0.071

Number of high-tech industries with GDP LQ>1 0.071

Note: I refers to the beginning year of index.


Table 2. Components of the Best-Performing Cities index


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Introduction

National Economic Conditions

The painful 2007-2009 recession came to an end in June 2009, but its reverberations are still

being felt. Real GDP declined 4.1 percent from peak to trough, the most severe in the post-warperiod, eclipsing the previous record of 3.7 percent experienced in the 19571958 recession. Whilevirtually no sector of the economy went unscathed, the magnitude of the contraction in business

investment and manufacturing explains much of the severity in the recent period relative to otherrecessions. However, what triggered the recession was the bursting of the housing and mortgage

nance bubble as it cascaded throughout the nancial system, ultimately leading to governmentintervention to stave o an even more serious economic contraction.

Overextended consumers facing heavy debt-servicing burdens on mortgages and credit cards,paired with wealth declines from losses in the stock market and the collapse in home values,

deferred purchases of discretionary items such as cars and other consumer durables. Services tied

to travel and tourism also witnessed a severe retrenchment. Foreign purchases of U.S. products andservices fell, and a massive destocking of inventories combined with the fall in business investmentcaused industrial production to contract 14.8 percent from December 2007 to June 2009. The peak-

to-trough decline in orders for manufacturing was 27.2 percent.6

The ultimate measure of the severity of the recession is its impact on labor markets, and here thetoll of the Great Recession was devastating and continues to this day. Based on the Bureau of Labor

Statistics establishment survey, a total of 8.4 million jobs were lost during the recent recession, andthe unemployment rate hit 10.1 percent. Small businesses accounted for a disproportion share of

the losses, and few hired new workers during the recession. In most recessions, a number of smallestablishments continue to expand payrolls despite cutbacks at others.

The central question looking forward is what will be the strength of the recovery. Some economists

are predicting a so-called double-dip recession, but they remain in the minority. The U.S. economyfaces many headwinds, but it seems that moderate but disappointing growth is the most likely

outcome. It will be disappointing in the sense that job growth over the next few years will not besucient to reduce the unemployment rate to pre-crisis levels.


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The Biggest Gainers

The Biggest Gainers

Those cities experiencing the biggest gains in the 2010 Best-Performing Cities index share important

similarities. The most signicant theme among the gainers was a heavily service-based economywith little durable goods production. Because the service sector tends to be less sensitive tobusiness cycles, metros with a larger share of their economic activity in that sector typically are

less likely to suer major declines in their economy. Conversely, metros with a heavier reliance ondurable goods manufacturing, which took a dramatic hit during this past recession, witnessed the

largest declines in output and employment. A majority of the biggest gainers also didnt experiencean extreme housing bubble earlier in the decade, allowing them to avoid a severe correction. For

most metros, however, it was simply a case of not deteriorating as rapidly as the national economy.

Gains were recorded across the country. Tennessee, West Virginia, Kentucky, California, and Floridaeach landed two metros on the list. Columbus, GAAL, made its second consecutive appearance

on the list of biggest gainers, leaping 67 spots to claim 45th. The metro experiencing the largestgain was Clarksville, TNKY, which moved up 97 spots to 39th place. Defense Base Closure and

Realignment (BRAC) shifts to Fort Benning (Columbus) and increased defense spending at FortCampbell (Clarksville) were key drivers of growth in those regions.

2010 2009 Spots

Metropolitan statistical area (MSA) rank rank climbed

Clarksville, TN-KY 39 136 +97

St. Louis, MO-IL 44 128 +84

Charleston, WV 61 144 +83

Pittsburgh, PA 32 109 +77

Huntington-Ashland, WV-KY-OH 73 149 +76

Green Bay, WI 102 171 +69

Columbus, GA-AL 45 112 +67

Lexington-Fayette, KY 100 161 +61

Vallejo-Fairfield, CA 115 173 +58

Brownsville-Harlingen, TX 13 70 +57

Visalia-Porterville, CA 70 124 +54

Jackson, MS 66 113 +47

Honolulu, HI 55 100 +45

Lincoln, NE 54 97 +43

Tallahassee, FL 88 129 +41

Pensacola-Ferry Pass-Brent, FL 116 157 +41

Duluth, MN-WI 122 163 +41

Louisville-Jefferson County, KY-IN 113 153 +40

Richmond, VA 79 118 +39

Chattanooga, TN-GA 133 172 +39


Table 3. Biggest gainers

Change in rankings


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The Biggest Decliners

The Biggest Decliners

The ripple eects of the housing crisis are still evident across the biggest decliners list. Housing

prices have yet to stabilize in most of these metros as inventory remains high and delinquenciescontinue to engulf neighborhoods. Several of these metros are also dependent on travel andtourism, which endured a substantial decline and slow recovery.

This year, California had both the biggest declinerSanta BarbaraSanta MariaGoleta,

Californiaand the most metros on the list, at four. The Santa Barbara areas low housingaordability will delay its housing correction for some time while budgetary problems at the state

level will likely impede growth at its University of California campus. The metros dependence ontourism will only add to economic woes until the recovery picks up.

2010 2009 Spots

Metropolitan statistical area (MSA) rank rank down

Santa Barbara-Santa Maria-Goleta, CA 138 43 -95

Fort Smith, AR-OK 150 62 -88

San Jose-Sunnyvale-Santa Clara, CA 132 50 -82

Greeley, CO 101 20 -81

Eugene-Springfield, OR 160 81 -79

Little Rock-North Little Rock-Conway, AR 93 23 -70

Portland-Vancouver-Beaverton, OR-WA 107 37 -70

New Haven-Milford, CT 153 88 -65Bridgeport-Stamford-Norwalk, CT 111 49 -62

Greenville-Mauldin-Easley, SC 136 77 -59

Wichita, KS 72 15 -57

Lake County-Kenosha County, IL-WI* 152 95 -57

Las Vegas-Paradise, NV 164 107 -57

Ocala, FL 159 104 -55

Peoria, IL 87 33 -54

Reno-Sparks, NV 196 143 -53

Worcester, MA 129 79 -50

Santa Ana-Anaheim-Irvine, CA* 172 122 -50

Salt Lake City, UT 49 3 -46

Riverside-San Bernardino-Ontario, CA 146 103 -43*Indicates metropolitan divis ion


Table 4. Biggest decliners

Change in rankings


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The Best-Performing Large Cities


KilleenTempleFort Hood, Texas, moved into the top spot in our 2010 Best-Performing Cities

index, edging up from second last year. The area, which experienced a devastating tragedy at FortHood in 2009, should be heralded for its economic performance amid a severe national recession.

The metro area recorded top 10 nishes in job growth over the ve-year and one-year periods, but

its overall performance was spurred by its rst-place position in ve-year and one-year wage andsalary growth. Additionally, it ranked third on year-over-year job growth measured through April

2010. Expansion at Fort Hood, with the associated economic ripple eects, is the primary catalyst forthis stellar performance.

The areas economy has beneted from the base consolidations ordered in 2005. Based on estimates

from the Defense Department, this long-term repositioning should transfer more than 8,000 militarypersonnel to Fort Hood from 2006 through 2011. Military compensation has been rising faster

than federal non-military and private-sector compensation over the last decade.7

Average militarypay surpassed $70,000 in 2009, based on data from the Bureau of Economic Analysis. Base-related

activity in local service sectors, such as professional and business services and many others, hasprovided stability to the areas economy during the severe national recession.

Recognizing that the stimulus from Fort Hood will wane, the area is focused on diversifying its

economy. Its location on the central I-35 trade corridor with Mexico provides such an opportunity. Inthe Killeen metro area, tangible results such as employment in support activities for transportation

are more than twice as important to the local economy as they are to the U.S. economy overall.

A combination of less over-extension of mortgage credit in earlier years and more stability in

employment during the recession mitigated the downturn in the housing market. Althoughnew-home construction fell, prices didnt plummet as in many other parts of the country. Higher

education is an area where the metro has seen growth and is anticipating further advances. CentralTexas College has already seen increased enrollment, and Texas A&M University Central Texas has

broken ground on a new campus. This provides the metro an opportunity to establish new research-related jobs and further diversify its economy.8

2009200820072006200520042003

15

10

5

0

-5

Wages, percent change from preceding year

Sources: Moody's Economy.com, Milken Institute.

Figure 1. Wage growthKilleen-Temple-Fort Hood vs. United States

Killeen-Temple-Fort HoodUnited States


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Slipping one spot to second overall, consistent performer AustinRound Rock, Texas, alsoranked

second on job growth over the ve-year period. It ranked in the top 25 on almost all growth

performance categories. This is an impressive achievement when you consider that Austin ishighly dependent on computers and information technology equipment, which was devastatedby the recession. Dell and several of its chip producers suered major declines as domestic and

international IT markets collapsed. The presence of the University of Texas, Austin, and Austins roleas the state capital helped insulate it from further damage. Austins low dependence on traditional

durable goods manufacturing and tourism provided further stability. Austins housing marketwitnessed far less severe declines than most metro markets did.

Although employment fell in 2009, Austins unemployment rate peaked at 7.3 percent, roughly3 percentage points less than the national gure. Austins relatively low cost of doing business for a

leading knowledge-based economy hub, combined with a favorable business climate and access to

an educated workforce, makes it a very attractive location to start or expand a business. Austins netpopulation increased by 32,000 in 2009, according to the Census Bureau, compared with a peak of48,000 in 2006.

Austin hopes to encourage more high-tech services, recognizing that hardware and chip makers

will create fewer jobs in the future. That said, Samsung intends to add a production line in Austinthat will employ 500 workers to make logic chips, demonstrating that Austin remains a key center

of U.S. chip manufacturing and will attract new incremental capacity in the future.9 On the high-techservice side, one recent success is Apples acquisition of Intrinsity Inc., which designed key parts of

a chip for Apples iPad. Intrinsity had around 100 employees at the time of the acquisition, but it islikely that Apple will make additional investments and add more employees. 10 Apple already has

around 2,500 employees in central Texas. Many other high-tech service rms such as Google andFacebook are adding employees in Austin.

2009200820072006200520042003

10

9

8

7

6

5

4

3

Percent


Figure 2. Unemployment rateAustin-Round Rock vs. United States

Austin-Round Rock

United States


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Huntsville, Alabama,jumped from eighth tothird, holding its own in the top 10. Like Killeen,Huntsville is beneting from base consolidation decisions made in 2005 but adds high-tech to

the mix of reasons it is a consistent performer. The Redstone Arsenal is home to NASAs Marshall

Space Flight Center, the Missile Defense Agency, and more than 60 government agencies andorganizations with more than $50 billion in total annual budgets.11 Slightly more than half of the35,000 people who work behind the Redstone Arsenals gates every day are civilian government

employees, and the remainder are government contractors.

Aerospace contractors are major employers in the metro area with over 4,400 jobs in total. Boeing,Northrop Grumman, and Lockheed Martin all have a major presence and spawn thousands of jobsin other industries. Huntsville is reported to have the nations highest concentration of engineers per

capita. Excluding federal, state, and local government, three of the top ve private-sector industriesare high-tech services. Due to real estate space limitations behind the arsenals gates, construction

recently began on the Redstone Gateway oce park to house the next expansion.12 The cancellation

of the Constellation Project, which was to develop two space vehicles that could bring humans andcargo to the moon, was a blow to further expansion.13 However, the area seems likely to get a sliceof new NASA research funding.14

2009200820072006200520042003

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10

5

0

-5

Jobs, percent change from preceding year


Figure 3. Professional, scientific, and technical servicesHuntsville vs. United States

Huntsville

United States

McAllenEdinburgMission, Texas, held on to fourth, anchored in the upper echelon of metros

by such key measures as job and wage and salary growth. McAllen is a consistent performer,remaining rst in ve-year job growth, matching last years position. For 2009, McAllen placed fth

in job growth overall among the 200 largest metros and second in 12-month job growth from April2009 to April 2010. The metro area suered during the recession in 2009, but the downturn was

substantially milder than in the nation overall. McAllen continued to have high population growth.

McAllens location on the Mexican border has made it a key trade and logistics site. The number

of cargo trucks crossing into Hildalgo County has more than tripled since the early 1990s.15


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Neighboring Reynosa, Mexico, is an important maquiladora location, attracting many leadingmultinational rms. A trade-driven logistic infrastructure has developed. Low business costs

make the McAllen area an attractive location for further expansion as rms remain focused on

cost containment. Another key source of growth has been in the areas role as a regional health-care center. Edinburg Regional Medical Center, McAllen Medical Center, and Rio Grande RegionalHospital are three of the top four private employers in the metro area.16

2009200820072006200520042003

14

12

10

8

6

4

2

0



Figure 4. Health-care and social assistance servicesMcAllen-Edinburg-Mission vs. United States

McAllen-Edinburg-Mission

United States

KennewickPascoRichland, Washington, was fth this year. Population gains propelled the

Kennewick metro area from the small metro list onto the list of the 200 largest metros. Kennewickhas recorded some impressive feats: It was rst in job growth in both the 2008-2009 and in April

2009-April 2010 measures. The stability of its economy in 2009 led to the large inux of newresidents.

Many of the areas job opportunities are tied to the Department of Energys Hanford environmental

remediation project. Massive amounts of federal funding are streaming into the area. Last yearsfederal stimulus legislationformally known as the American Recovery and Reinvestment Act

of 2009 (ARRA)appropriated signicant funding for the Hanford project, which is attemptingto demonstrate that an area with extensive nuclear contamination can be remediated and partly

reclaimed. Much of the plutonium production for nuclear weapons was housed at the Hanford site.The Hanford project will last several decades, and the centerpiece is the construction of a

$12 billion vitrication plant, a facility that turns radioactive waste into glass for more stablestorage.17 This work supports construction, a wide range of professional services such as engineering

and architectural design, and manufacturing.

The region is home to the U.S. Department of Energys Pacic Northwest National Lab, operatedby Battelle. Several large engineering rmsBechtel National and Fluor Hanford among them

provide contract consulting services to the federal government. Another reason for stability in theregions economy is its large share of food manufacturing jobs, an area that didnt decline much


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during the recession. Kennewick has 45 percent of all manufacturing jobs in food production versusthe national average of 12 percent.18 The housing market has seen just a modest decrease in prices,

largely due to the regions better job performance.

2009200820072006200520042003

8.5

8.0

7.5

7.0

6.5

6.0

5.5

5.0

4.5

Thousands


Figure 5. Population growthKennewick-Pasco-Richland, WA

Ranked 25th last year, WashingtonArlingtonAlexandria, DCVAMDWVMD,jumpedto sixth

place on this years list. The metro ranked 11th in 20082009 job growth, and its jobs base grew by

0.27 percent13th in the nationin the April 2009April 2010 period. The federal governmentwas by far the primary driver of 2008-2009 job growth, adding nearly 11,000 positions. Last years

stimulus package provided a signicant boost to the metros economy. In fact, of the awardsdistributed, the District of Columbia received nearly 10 times as much stimulus per capita as the

national average.19 The impacts from this federal spending have provided stability during thedownturn, resulting in a milder recession in the Washington-Arlington-Alexandria area.

2009200820072006200520042003

4

3

2

1

0

-1

-2



Figure 6. Federal governmentWashington-Arlington-Alexandria vs. United States

Washington-Arlington-Alexandria

United States


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Support from the federal government has fueled growth across a spectrum of high-tech industries,providing $78.5 billion of contract work in the region.20 Northrop Grumman recently announced

that it will relocate its corporate headquarters to Northern Virginia, creating nearly 300 executive

positions.21 In 2009, the number of U.S. companies engaged in government services rose to 335,an increase of 33 percent. More than half of them are based in Maryland, Virginia, and the Districtof Columbia.22 One of those companies, headquartered in McLean, Virginia, Booz Allen Hamilton

(BAH) will be focusing on its civil aviation operations in an eort to meet the FAAs objectives ofimplementing the Next Generation Air Transportation System.23 This move, while drawing from

existing BAH employees, should help sustain jobs in the area.

RaleighCary, North Carolina, placed seventh this year, improving by three spots. A sign of itssustainable economic presence, RaleighCary recorded the third highest job growth in the nation

over the ve-year period. The metro placed 16th in ve-year wage and salary growth, an indication ofthe quality of jobs produced. Its vast high-tech presence includes biotech, IT, software, and telecom,

and includes major players like GlaxoSmithKline, SAS Institute, Cisco Systems, Verizon, and NortelNetworks. The combination of giant tech anchors and reputable research-oriented universities (Duke

and North Carolina State universities) makes Raleigh-Cary an attractive business location. The recentcollaboration of IBM and North Carolina State on streamlining the commercialization process sheds

light on the regions entrepreneurial spirit and long-term growth potential.24

Despite some restructuring of rms during the downturn, the regions Research Triangle, a tightly

integrated network of high-tech rms, places the metro in better position for fast recovery. RaleighCarys high-tech cluster provides long-term stability to its nationally recognized biopharmaceutical

industry. The metro has witnessed robust population growth since 2000, attracting a sea of youngprofessionals.

Anchorage, Alaska, leapfrogged 32 positions to capture eighth overall on this years index. Itposted the second highest 2008-2009 job growth, when federal, state, and local governments

combined added nearly 850 jobs. Much of the job growth has been triggered by federal stimulusfunds; Alaska received the second highest amount per capita.25 Despite the downturn experienced

in most parts of the nation, the number of non-farm jobs in the Anchorage area increased0.41 percent from April 2009 through April 2010.

2009200820072006200520042003

15

10

5

0

-5

-10

-15



Figure 7. Oil and gas extractionAnchorage vs. United States

Anchorage

United States


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Oil and gas extraction and transportation, both key drivers of growth in the metro, have recentlyexperienced modest gains. While production in most energy-producing regions across the country

cooled o as prices stabilized, exploration in Alaska has remained healthy.26 In addition, since many

of the industrys administrative oces are based in Anchorage, the metro has beneted throughthe secondary impacts of stable production. Headquartered in Anchorage, ASRC Energy Servicesemploys approximately 2,100 in the metro.27 BP Exploration Alaska and Conoco Phillips also conduct

operations in the region. Anchorage serves as the transportation hub for the entire state. As therecovery picks up, the metro is poised to capitalize on increased cargo activity at the port.

Gaining ve spots this year, El Paso, Texas, ranked ninth on the overall index. Military construction

stemming from the BRAC-initiated expansion at Ford Bliss continues to contribute to the metrosoverall growth. El Paso has remained in the upper echelon in terms of both job creation and wage

and salary growth. From 2008 to 2009, jobs in the metro grew nearly 2.5 percentage points faster

than the national averagethe 17th highest rate in the nation. Trade and commerce along theMexican border are among the biggest drivers of growth in the area, and due largely to the strengthin the Mexican peso, activity is gradually starting to pick up. Having generated almost $28 billion

in trade through May 2010, the Port of El Paso has witnessed a 47 percent increase in trade valuecompared to the same time last year.28 In addition, the increasing number of truck crossings along

the border, coupled with an increase in maquiladora activity in Juarez, indicates improved auto-related demand and production.29

2009200820072006200520042003

8

6

4

2

0

-2



Figure 8. Federal governmentEl Paso vs. United States

El Paso

United States

Another bright spot in El Pasos economy is an 80 percent increase in trade of computer products with

Mexico in the year ending May 2010, an industry that accounts for the majority of the metros trade withits southern neighbor.30 Approximately 150 jobs were created in the areas computer and electronic

product manufacturing industry, a rise of nearly 20 percent from April 2009 through April 2010.


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HoustonSugar LandBaytown, Texas, slipped ve spots to tenth place. Led by the energyexploration sector, the metros ve-year job growth ranked fth. Capitalizing on its proximity to the

Gulf of Mexico, Houston has successfully established itself as a center for trade and export. Major

companies with operations in the areaincluding Exxon Mobil, Shell Oil, Chevron, and BPemploythousands in engineering and professional jobs that support exploration-related activities. The risein oil prices in 2009 helped jumpstart upstream activities. On the other hand, work at reneries has

slowed during the downturn but is expected pick up gradually as the recovery continues.31

Houston is also leading eorts with respect to alternative energy. Just recently,Thermal EnergyCorporation debuted its combined heat and power plant at Texas Medical Center, an investmentexpected to generate over 400 jobs.32Another key source of growth in the metro comes from health

care. Ambulatory health-care services added nearly 6,000 jobs in the area in the year from 2008to 2009, helping oset declines in other sectors stemming from the global slowdown. Leveraging

its pool of talent and reputable medical research centers, Houston is developing its biotech and

medical equipment manufacturing sector into a national leader.33

Lafayette, Louisiana, managed to maintain its ranking among the top performers, dropping justtwo spots to 11th. Over the past few years, the metro has not only beneted tremendously from

post-Katrina migration trends but has also successfully capitalized on increased energy explorationin the Gulf of Mexico. The inux of new residents helped fuel jobs in health care and education.

Lafayettes biggest industry, support activities for mining, employs over 13,000 people, roughly9 percent of the metros total employment base. The industrys huge presence in the area has

broader impacts across a variety of local manufacturing suppliers, ranging from chemicals tofabricated metal products. Lafayette ranked sixth in ve-year job growth and second in ve-year

wage growth.

2009200820072006200520042003

10.2

10.0

9.8

9.6

9.4

9.2

9.0

8.8

As percent of total employment


Figure 9. Support activities for miningLafayette, Louisiana


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However, the number of jobs has declined 1.4 percent in the year ending April 2010. Since energyprices began falling from their peak levels, support activities for drilling appear to have tapered o.

Furthermore, a drilling moratorium stemming from the recent oil spill in the gulf could threaten

thousands of jobs in the metro area,34 potentially creating negative ripple eects in a region whoseeconomy depends on energy exploration.

TrentonEwing, New Jersey, improved 34 spots, capturing 12thplace on this years index. The

metros resilience in biotech R&D has contributed to its growing high-skilled labor pool. One ofbiotechs biggest players, Bristol-Myers Squibb, has one of its primary R&D sites in the metro. Theindustrys generally high pay has delivered a boost to wages, with Trenton ranking tenth in wage

growth for the 20072008 period. Wages in the metro during that time grew over four percentagepoints more than the national average. Trentons high concentration of biotech employment and

proximity to life sciences attractions have lured entrepreneurs and researchers to the area.

While industries such as health care and education services have largely beneted from the metroshigh per-capita wage structure, a downward trend has begun. Employment declined 1.2 percent

in the year ending April 2010. Like many states, New Jersey is facing budgetary woes.35 Althougha reduction in public spending is likely to curb growth in the near term, the metros high-tech

presence and other key attributes will keep it aoat in the long term.

Brownsville, Texas, skyrocketed a remarkable 57 spots this year to 13th. It ranked rst in high-tech

output growth, largely driven by telecommunication services, in 2008-2009 and second in the ve-year period. The metros lower costs have attracted satellite telecom carriers and call centers such

as Convergys and Advanced Call Center Technologies. The latter recently decided to expand itsoperation in the area and add 150 jobs.36 Government eorts at the federal, state, and local levels

continue to support the regions trade and transportation infrastructure, creating a positive outlookfor growth. In fact, the public sector added more than 650 jobs from 2008 to 2009. Health care has

been another driver of growth in the region, mitigating some of the downturns eects.

2009200820072006200520042003

10

5

0

-5

-10



Figure 10. TelecommunicationsBrownsville vs. United States

Brownsville

United States


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The metro, which serves as a transportation hub, is largely dependent on cross-border tradewith Mexico. With the economy in recovery mode, a broad spectrum of industries linked to

transportation and warehousing will benet extensively from increased trade activity. It is

noteworthy that support activities for transportation are twice as important to the region as theyare to the nation as a whole. Its role in transportation and its attractive climate are reasons theregions rst biodiesel terminal opened in Brownsville.37 Venturing further into clean tech can give

Brownsville another tool for long-term stability and growth.

San Antonio, Texas, nished 14th on this years index, slipping three positions. In the 2004-2009

period, San Antonios employment base grew over 10 percentage points faster than the nationalaverage, resulting in a ninth place nish for ve-year job growth. BRAC-related growth has been the

biggest driver. Because of base consolidations, the metro is evolving into a large-scale medical hubfor military personnel, most notably the expansion of the Brooke Army Medical Center. Increased

federal funding will boost demand for local suppliers and attract more private-sector support.

Recently, Medtronic, which supplies products for diabetes patients, expanded its operations in SanAntonio, a move that is expected to generate 1,400 high-paying jobs over the next ve years.38

The metros solid position in the rankings also reects its lesser exposure to the housing crisis. Prices

fell only moderately during the downturn, and more military employment has boosted demandand kept prices stable. San Antonios reputation as a trade and distribution hub with a low-cost

environment will open doors to more business opportunities in the long term.

Durham, North Carolina, dropped nine spots to 15th, still among the leaders. In 2009, the

metro had the fourth highest concentration of high-tech output in the countrymore than 2.5times the national average. Duke University and IBM create important anchors for the regions

information sector, supplying an abundance of human capital to the Research Triangle, one of the

nations most reputable biopharmaceutical and medical centers. The largest biotech company inthe Triangle, Talecris Biotherapeutics, was recently acquired by Grifols, the largest maker of bloodplasma products in Europe. Despite the acquisition, plans by Talecris to expand its blood plasma

therapeutics plant in Clayton, also part of the Research Triangle, are still on target and expected togenerate nearly 260 jobs in the area.39

2009200820072006200520042003

55

50

45

40

35

US$ thousands


Figure 11. Wages per employeeDurham vs. United States

DurhamUnited States


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While some restructuring has taken place during the downturn, leading to job losses particularlyamong its key sectors, Durham has held up relatively well. Higher per capita income growth relative

to the U.S. as a whole has kept housing prices from falling so rapidly, while leading to healthier

spending in such sectors as education and health services. Public support has provided furtherstability to the region, as witnessed by a 4 percent increase in government employment in theprevious year since January 2010.

Amarillo, Texas, climbed up the rankings, from 35th last year to 16th on this years index. Likemany Texas metros, Amarillo avoided the housing bubble and didnt experience the severe bustthat ensued. In fact, broad-based job growth has provided more stability to the local economy. A

surge in wage growth was behind the big jump in rankings; the metro recorded the second highestgrowth in wages and salaries from 2007 to 2008. Much of this stems from its energy exploration

sector, which has long been a key performer in the area. The Amarillo area also benets from rich

and abundant farmland and extensive livestock operations, providing another source of wealth tothe region. Tyson Foods is the largest employer, with a workforce of more than 3,500.40

Increased demand for helicopters has been another bright spot. Bell Helicopter and Boeing,who partner on certain aircraft, are likely to benet from the defense contracts, and increasing

production will lead to more jobs in the metro.41

With its highly diverse high-tech industry mix, DallasIrvingPlano, Texas, maintains its lead

among the top performers, coming in at 17th this year, versus 13th a year ago. The metro rankedsixth in high-tech diversity (as measured by the number of high-tech industries with location

quotientsor relative concentrationsabove 1.0, which represents the national average). Theareas innovative IT and telecom sector includes major players like AT&T (which recently moved

its headquarters to Dallas), Verizon, Texas Instruments, and Hewlett-Packard, just to name a few.Increased global demand for tech products and, in particular, the move to 4G networks will spark

additional demand from equipment makers in the area. Locally based companies such as Sprint andMetroPCS will build out the network, while Nokia and Ericsson will provide the equipment.42

2009200820072006200520042003

30

20

10

0

-10



Figure 12. Warehousing and storageDallas-Plano-Irving vs. United States

Dallas-Plano-Irving

United States


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Because of its central location, Dallas is a distribution hub. Even during the downturn, its warehousingindustry, which capitalized on its cost advantages, managed to expand slightly, adding roughly 110

jobs from 2008 to 2009. The metro will benet further as international trade begins to recover.

Fayetteville, North Carolina, gained 13 spots, ranking 18th in the index. Fort Bragg, the primarydriver of growth in the area, has beneted signicantly from base consolidation. The added

military personnel have stimulated demand across a broad array of supplier industries. As a result,Fayettevilles employment base grew more than 4 percentage points faster than the national

average to rank third in 20082009. It is anticipated that Fort Bragg will be the largest Army postafter 2011, with approximately 65,000 jobs.43 In the near term, expansion of various base facilitiesand the need for additional housing will likely lift the metros construction sector. The area will also

benet from the fact that the homebuyers tax credit, which expired in April 2010 for the generalpopulation, was extended for one year for military personnel who have been serving outside the

country for 90 days or more.44 Furthermore, the federal stimulus package will accelerate various

infrastructure projects around the base.45

CharlestonNorth Charleston, South Carolina, climbed to 19th from 30th last year. The metroswell-balanced industry mix helped carry it through much of the downturn. Once the main catalyst

for growth, tourism is on the decline, so Charleston has turned to its vibrant aerospace sector, healthservices, and stable military presence for growth. Its emerging aerospace industry added more

than 1,000 jobs from 2004 to 2009, contributing to Charlestons coming in 19th in high-tech outputfor that period. Boeing recently decided to build an assembly plant for its 787 Dreamliner that is

expected to employ 3,800 workers in the area.46

As the economy rebounds, increased inbound cargo activity at the Port of Charleston should helpsustain long-term growth. A $98 million grant awarded to Clemson University to build a wind

turbine drivetrain testing facility in North Charleston underscores the metros attractiveness as adestination for clean tech.47

2009200820072006200520042003

0.50

0.40

0.30

0.20

0.10

0.00

10.2

10.0

9.8

9.6

9.4

9.2

9.0

As percent of total employment As percent of total employment


Figure 13. Aerospace and health-care driving growthCharleston-North Charleston

Aerospace manufacturing - L

Health-care services - R


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BethesdaGaithersburgFrederick, Maryland, leaped 31 positions this year to 20th.Theheadquarters of Lockheed Martin, Bethesdas strengths lie in defense-related applications. Increased

federal spending on military products has provided steady job growth, mitigating some of the

losses from the downturn. From 2008 to 2009, the U.S. government was responsible for addingnearly 2,000 jobs in the area.

2009200820072006200520042003

5

4

3

2

1

0

-1

-2



Figure 14. Federal governmentBethesda-Gaithersburg-Frederick vs. United States

Bethesda-Gaithersburg-Frederick

United States

Establishments engaged in medical research and biotech have contributed to the metro ranking18th in high-tech diversity. The National Institutes of Health headquarters has been a magnet for

federally funded R&D as well as venture capital for biotech. Not surprisingly, the regions high-techoutput grew 10 percentage points faster than the national average from 2008 to 2009 to rank third.

In addition, the National Naval Medical Center recently broke ground on a facility that will focus onsoldiers with traumatic brain injuries and psychological issues.48

Oklahoma City, Oklahoma, jumped ve spots to take 21st place. The metro was among the few

that experienced a short downturn and are in recovery. Relatively little exposure to subprimemortgages shielded it somewhat from the housing collapse. In addition, the housing market

beneted from the presence of Tinker Air Force Base, the Mike Monroney Aeronautical Center, and anumber of aerospace suppliers. Oil and natural gas extraction a big presence in the metro area

has begun to recover from the recession and falling energy prices. The active rig count in Oklahomawas 133 as of August 2010. The state had 94 active rigs in 2009, about half as many as in 2008.49 Like

most states, Oklahoma is facing a budget crisis; its tax revenues fell 26.9 percent over the past year,more than any other states.

Another bright spot for Oklahoma City was the July 2010 opening of a $1.8 million, 6,000-square-

foot terminal for corporate jets and private charters. Capable of handling 10,000 ights a year, theterminal replaces an older facility. AAR Corp., which operates the terminal, runs a maintenancehangar, and has fueling contracts at Will Rogers World Airport, employs 615 full-time workers and

has an annual payroll of $30 million.50


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The top job creator in Oklahoma City was government, which added 1,850 jobs from 2008 to

2009. In the same period, the areas large health-care industry created 1,300 jobs, and oil and gas

extraction added 730 positions.

2009200820072006200520042003

20

15

10

5

0

-5



Figure 15. Oil and gas extractionOklahoma City vs. United States

Oklahoma CityUnited States

CambridgeNewtonFramingham, Massachusetts, leaped 23 spots, landing at 22nd on the list ofthe 200 largest metros. It is home not only to world-renowned universities but also a large number

of high-tech, health-care, defense, and nancial rms. The diverse economy and highly skilled laborforce, as well as the states targeted business tax initiatives, make the region highly competitive. In

2008, Massachusetts launched a $1 billion, 10-year initiative that includes incentives for life sciencescompanies to expand, research grants for scientists, and other infrastructure investments to support

the industry. Pharmaceuticals giant Sano-Aventis, one of 56 companies to apply for related taxcredits this year, has announced a $65 million expansion in Cambridge expected to create 300

jobs.51 Defense spending has also helped the local economy, beneting university research anddefense contractors such as Raytheon, which is headquartered in the metro. As the wars in Iraq and

Afghanistan wind down, cutbacks in defense spending will be oset by gains in other industries asthe economy improves.

Health-care services had a strong year, adding 1,780 jobs from 2008 to 2009. Management of companies

was responsible for creating 730 jobs, while the federal government created 200 jobs in the area.

Fort WorthArlington, Texas, tumbled sharply from 12th last year to 23rd this year. The lower-cost Forth Worth continues to capitalize on spillover from Dallas and is experiencing robust

population growth. As the economy recovers and natural gas prices improve, the area will likelysee improved growth in energy exploration. Other key industries in Forth Worth such as aerospace

and auto manufacturing are feeling the eects of the recovery. GMs light truck production plantexpanded its existing shift, while Bell Helicopters deliveries of V-22 Ospreys and H-1 helicoptersincreased, osetting some of the pullback in F-22 orders.52 The nance industry is growing, with

credit intermediation services adding more than 1,700 jobs from 2008 to 2009. The metros overallemployment growth, driven by energy exploration and health-related services, fared better than the

national average from 2008 to 2009, with Fort Worth at 45th.


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Employment declined by just 1.1 percent in the year ending April 2010. Anchor rms AmericanAirlines, which is headquartered in the metro; Texas Health Resources; and Lockheed Martin, which

maintains a major presence there, provide longer-term stability for the area.

2009200820072006200520042003

10

8

6

4

2

0

-2

-4

-6



Figure 16. Credit intermediation and related activitiesFort Worth-Arlington vs. United States

Fort Worth-Arlington

United States

Lubbock, Texas, captured the 24th spot, a slight improvement from 29th. Lubbock is one of the fewmetros that are faring better than the nation as a whole, with unemployment at 6.7 percent in July

2010.53 Lubbocks housing market is fairly stable because the region did not experience a housingbubble. Texas Tech University provides the biggest economic engine in the region, with over 13,000

employees and an annual economic impact of $1.15 billion in Lubbock County.54 However, statebudget woes resulting in a 5 percent reduction ($30 million) in state funding for the university

through 2011 will pose some challenges for the local economy.55 Health care has played a role in jobcreation, with ambulatory health-care services adding 700 jobs in 2008-2009. The metro is a large

cotton grower, so improving cotton prices and better weather could help bolster incomes. Still, theareas wage and salary growth ranked 13th in the 2007-2008 period.

ProvoOrem, Utah, climbed three spots to take 25th in the index. The areas economy has beencreating jobs faster than the national average for several years. From 2004 to 2009, Provo-Orems

employment base expanded 10.2 percentage points faster than the U.S. average, ranking 10thoverall in this indicator, while ve-year wage growth ranked fourth. High-tech information services

and hardware are driving much of the growth. Provo-Orem has beneted from increased researchand spin-os from Brigham Young University, the largest employer in the metro. Construction of a

$1 billion National Security Agency data center near Lehi will also improve the regions employmentoutlook.56 The housing industry is still reeling, especially the market for second homes.

Data processing, hosting, and related services added 510 jobs in 2008-2009. Local governmentadded 490 workers, and education services created 360 jobs.


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Americas 10 Largest Cities: Performance


Among Americas 10 largest metropolitan areas, the rise ofWashingtonArlingtonAlexandria

from 41st place to sixth over the past two years and the continued decline of many large non-Texascities in the Sun Belt are the main stories. The two largest cities in Texas still hold a place in the top25 despite some minor declines: HoustonSugar LandBaytown fell ve places but remains in

the top 10, and DallasPlanoIrving dropped four places to a still respectable 17th place. (TheWashington, Houston, and Dallas metro areas were proled earlier in the section on the top 25 best-

performing cities.)

Signicant declines continue to hit former high iers. The formerly booming metros ofPhoenixMesaScottsdale, Arizona;AtlantaSandy SpringsMarietta, Georgia; and RiversideSan

BernardinoOntario, California,have all fallen from the top 100. Californias problems are furtherillustrated by Los AngelesLong BeachGlendale coming in lastamong the 10 largest cities. One

other key factor bolstering many of the major metros has been the signicant declines in populationight to the suburbs and fewer people moving to formerly thriving Sun Belt metros. For instance,

Chicago saw its fastest population growth in a decade.57

2010 2009 Spots

Metropolitan statistical area (MSA) rank rank up/down

Washington-Arlington-Alexandria, DC-VA-MD-WV* 6 25 +19

Houston-Sugar Land-Baytown, TX 10 5 -5

Dallas-Plano-Irving, TX* 17 13 -4

New York-White Plains-Wayne, NY-NJ* 48 38 -10

Philadelphia, PA* 83 96 +13

Phoenix-Mesa-Scottsdale, AZ 117 93 -24

Atlanta-Sandy Springs-Marietta, GA 126 106 -20

Riverside-San Bernardino-Ontario, CA 146 103 -43

Chicago-Naperville-Joliet, IL* 148 148 0

Los Angeles-Long Beach-Glendale, CA* 158 139 -19

* Indicates metropolitan division


Table 5. Performance of the 10 largest metrosRank according to 2010 index


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Although it edged down 10 places overall, New YorkWhite PlainsWayne, New YorkNew Jersey,

held its position at fourth among the 10 largest cities. In a year where its most prominent industry,

securities and investment trading, has been hit hard, New York has weathered the economic

downturn better than most cities on this list. Employment has been recovering faster than mostmajor cities, helped signicantly by its largest banks receiving nearly half of all disbursed funds fromthe Troubled Asset Relief Program (TARP).58

However, despite the banks recovery, securities and investment trading has taken a signicant

hit, with securities, commodity contracts, and other nancial investments and related activitiesdeclining by more than 9 percent over the past year. That sector lost more than 20,000 jobs, nearlyosetting the gain of 23,000 positions over the previous four years. The most signicant year-over-

year decline occurred in professional, scientic and technical services, a sector in which the NewYork metro had outperformed the nation in the previous two years. Although employment in the

sector only declined by slightly more than 5 percent, this amounted to 22,000 lost jobs. Even New

York has not been immune to the housing slowdown; specialty trade contractors shed more than15,600 jobs in the past year, wiping out a gain of over 12,100 jobs during the previous four years.

Over the past ve years, and last year, the metros largest job creator has been in the ambulatoryhealth-care sector. That sector grew by more than 21 percent and 43,700 jobs in the ve-year period.

Despite its recent losses, professional, scientic, and technical services still netted over 37,300 jobsfrom 2004 to 2009. Educational services performed well in the past year, adding over 6,200 jobs, and

in the past ve years, adding 25,700 jobs.

The outlook for next year is anemic, given that much of the New York metros job growth occurred inthe rst four years of the ve-year period we examined.

2009200820072006200520042003

6

4

2

0

-2

-4

-6



Figure 17. Professional, scientific, and technical servicesNew York-White Plains-Wayne vs. United States

New York-White Plains-Wayne

United States


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The past year has been better for Philadelphia, Pennsylvania, than for the country as a whole.

Philadelphia and Washington, D.C., are the only two large metros to move up in the overall large cityrankings. Philadelphia gained 13 places to 83rd overall and surpassed Phoenix to rank fth among

the 10 largest metros, while Washington took rst in the largest city rankings versus third last year.

Corporate management continues to be a signicant source of job creation for Philadelphia. From

2004 to 2009, the region netted over 11,270 jobs in the management of companies and enterprises.But growth stalled in 2009, and the sector lost 150 positions. Still, overall prospects appear solid.

Another leader in job creation was social assistance, which added slightly more than 2,500 jobs in2008-2009 and nearly 16,300 jobs in the ve-year period, growing at a rate of more than 44 percent.

On the down side, administrative and support services lost 9,000 jobs in the past yearthe most joblosses in any category. These losses wiped out the modest gains of the previous four years, for a net

loss of 7,700 jobs in 2004-2009the most job losses in any category for that period.

Philadelphias outlook is in many ways more solid than other large metros, but recent signs of

lethargy in a number of sectors suggest that, while the metro may continue to rise in next yearsrankings, the ascent may come at a slower pace.59

2009200820072006200520042003

20

15

10

5

0

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Figure 18. Management of companies and enterprisesPhiladelphia vs. United States

Philadelphia

United States

The slide in the rankings continues for PhoenixMesaScottsdale, Arizona, which fell 24 moreplaces to 117th overall in 2010 after plunging 61 spots in the 2009 index. The housing and economic

slumps continue to aect the metro, which was fourth overall as recently as 2007. Among thelargest metros, Phoenix now sits in sixth place, having fallen behind Philadelphia.

Specialty trade contractors shed nearly 29,500 jobs in 2009 and almost 33,400 over the ve-year

period as gains from 2005 and 2006 disappeared. Building construction saw a further loss of 8,000jobs in 2009. Administrative and support services, which gained 14,300 jobs from 2004 to 2008,

reversed course dramatically, losing 26,100 jobs in 2009.


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Job growth in the Phoenix metro has outpaced the U.S. average in two sectors that have thrivednationally despite the recession: ambulatory health-care services and educational services. Health

care, which gained 2,300 jobs over the past year, expanded even faster over the ve-year period,

growing by 33 percent and adding more than 22,700 jobs at a pace of nearly 5,000 a year in 20042008, before slowing in 2009. As the home of the University of Phoenix and other online educators,the metro has beneted from a gain of 2,500 education jobs in 2009a leader in this category

and 10,100 jobs in the ve-year period.

2009200820072006200520042003

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Figure 19. Specialty trade contractorsPhoenix-Mesa-Scottsdale vs. United States

Phoenix-Mesa-Scottsdale

United States

AtlantaShady SpringsMarietta, Georgia, remains one of the fastest-growing metros in thecountry, although the recent downturn has stalled the pace of job growth. The citys overall ranking

dropped 20 places, from 106th to 126th, but it rose one spot to seventh among the 10 largest citiesdue to even steeper declines in the Riverside, California, metro.

Though the downturn has aected a number of sectors, Atlantas previous gains cant quickly be

erased. Professional, scientic and technical services lost 9,650 jobs in 2009 but still netted animpressive 19,700 jobs for 20042009. Local government shed over 1,900 jobs in 2009, but still

gained a metro-leading 22,900 jobs for the ve-year period. One sector that performed unusuallywell during the downturn was the category religious, grantmaking, civic, professional, and similar

organizations, which gained over 5,400 jobs in 2009, more than twice those gained in the secondbest sector, educational services.

Atlanta has beneted as a center of transportation and warehousing. Unlike the rest of the country,

Atlantas air transportation sector is growing, adding 440 jobs in 2009. In addition, a proposed bondissue to improve freight movement in the metro, which is already home to UPS, should improve

matters further.60 However, local manufacturing in transportation continues to decline, losing morethan 7,090 jobs in 200420092,350 of them in the past year.


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2009200820072006200520042003

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Figure 20. Transportation equipment manufacturingAtlanta-Sandy Springs-Marietta vs. United States

Atlanta-Sandy Springs-MariettaUnited States

The downturn in homebuilding and the state economy weighed heavily on RiversideSan

BernardinoOntario, California, which plunged 43 places to 146th overall, the largest decline

among the 10 largest metros. It is hard to believe that as recently as 2007, Riverside ranked thirdamong large metros; this year it ranks eighth. Employment in the specialty trade contractor sector,

the largest part of the home construction industry, has plummeted more than 43 percent since2004, shedding more than 35,800 jobs16,500 of them in the past year. The ripple eect of the

weak housing market is reected in the fact that, of the 87 industrial sectors tracked in the index,just 13 added jobs in 2009, with educational services leading the pack at a mere 680 positions.

Only telecommunications, ambulatory health-care services, the federal government, and hospitalsmanaged to gain at least 500 jobs.

Many sectors that were signicant job creators in 20042008 changed course in 2009. The downturn

in international trade has aected the boom area of warehousing and storage, which lost 220 jobslast year after gaining nearly 8,000 in the previous four years. Administrative and support services,

which added nearly 4,500 jobs in 20042008, lost over 6,600 jobs in 2009. Local government addedover 12,000 jobs in 20042008, only to eliminate over 3,100 jobs in 2009 as scal pressures and state

budgetary problems aected their revenues. Even food services and drinking places, which createda leading 13,900 jobs in 20042008, lost over 5,000 jobs in 2009 as disposable income shrank.

One piece of good news: While local home sales continue to stagnate, the foreclosure rate fellthroughout 2010, suggesting the crisis is past its peak.61


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2009200820072006200520042003

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Figure 21. Warehousing and storageRiverside-San Bernardino-Ontario vs. United States

Riverside-San Bernardino-Ontario

United States

ChicagoNapervilleJoliet, Illinois, holding steady at 148th overall, jumped from 10th to ninth

place among the biggest cities, largely because the Los Angeles area continued to slide. Chicagohas been aected by the recession and housing downturn in a number of areas, which has helped

push many suburbanites back into the city.

Reecting the housing slump, more than 20,800 specialty trade contractor jobs were lost in 2009,second only to administrative and support services. That category lost more than 34,300 jobs last

year, after gaining nearly 12,000 jobs from 2004 to 2008. Conversely, employment in educationin the metro has outperformed the national average in the past ve years, with over 21,600 jobs

gained in 20042009, including 5,600 positions in the last year alone.

Over the past year, just ve sectors added jobs, led by educational services, followed by ambulatoryhealth-care services (4,340) and nursing and residential care (2,080). In Chicago, those three sectors

accounted for 85 percent of the jobs created in the tracked sectors in 2009.

2009200820072006200520042003

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3

2

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Figure 22. Educational servicesChicago-Naperville-Joliet vs. United States

Chicago-Naperville-Joliet

United States


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Los AngelesLong BeachGlendale, California, continued its slide from last year, falling 19 spotsto 158th overall and to last place among the 10 largest metros. With an unemployment rate of

12.6 percent as of August 2010, Los Angeles County lost 37,400 non-farm jobs between June and

July alone.62 In the past year, the metro lost more than 31,000 jobs in administrative and supportservicesan eighth of the sectors total workforcemoving that sector into the lead for ve-year

job losses at over 28,000 lost jobs

Job growth in management of companies and enterprises continues to suer in Los Angeles. Over

the past ve years, the sector lost more than 18,700 jobs, a 26 percent decline. One ongoing areaof concern is motion picture and sound recording. The sector made gains in 2004, 2007, and 2008,after the writers strike, but losses in 2009 outpaced the nation as a whole.

On the upside, educational services added 6,400 jobs in the past year and over 16,000 jobs during

the ve-year period. Although water transport gained just 1,500 jobs over the ve-year period, that

marks a dramatic 106 percent increase.

2009200820072006200520042003

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Figure 23. Motion picture and sound recording industriesLos Angeles-Long Beach-Glendale vs. United States

Los Angeles-Long Beach-GlendaleUnited States


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The Best-Performing Small Cities

The Best-Performing Small Cities

In addition to ranking the 200 largest metro areas in the United States, we also have created a

companion index of the best-performing small cities. The 2010 index is composed of 179 smallmetros, which is 55 more than the 2009 index. Due to budget cuts, the Bureau of Labor Statistics(BLS) was unable to gather data for the additional metros in the past year.

The big winners in the 2010 small cities index have at least one (or a combination) of these three

assets: energy-related natural resources, a major university, and a military base. These metrosavoided a housing bubble and the eects of its collapse, so their downturns were mild and short.

Some beneted from the government stimulus package and the preceding private investment.It would be interesting to see how these metros fare next year as the stimulus winds down and

defense spending and state budget cuts continue.

Unlike the 2009 small cities index that Texas clearly dominated with four metros in the top 10, the2010 index was mixed. While College StationBryan and Tyler, Texas, were in the top 10, North

Dakota grabbed the top two spots with Fargo followed by Bismarck (both made last years top 10).Las Cruces, New Mexico, is on the list for the second year in a row.

At the other end of the spectrum, many small cities in the upper Midwest, particularly those in

Michigan and Wisconsin, did not fare well, placing in the bottom ranks.

Metropolitan statistical area (MSA)2010rank

2009rank

Fargo, ND-MN 1 10

Bismarck, ND 2 7

Jacksonville, NC 3 n.a.

College Station-Bryan, TX 4 14

Hinesville-Fort Stewart, GA 5 n.a.

Morgantown, WV 6 27

Tyler, TX 7 4

Las Cruces, NM 8 9

Iowa City, IA 9 22

Lawton, OK 10 n.a.

*Among 179 small metros


Rank according to 2010 index*

Table 6. Top 10 best-performing small cities


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Fargo, North Dakota, jumped nine spots to become the best-performing small metro in 2010.The metro experienced a very mild recession and a quick recovery. Unemployment was less than

4 percent, one of the lowest rates in the nation. Tight labor markets elsewhere resulted in new

residents moving to the region.

Growing global demand for wheat, corn, soybeans. and other agricultural commodities has

beneted the region in recent years and has increased local incomes. How

best-performing cities 2010 - where jobs are created and sustained

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